Moore v. Jacobs , 190 Mass. 424 ( 1906 )

Hammond, J.

It has been established by the verdict of the jui'y that no one of the six notes A, B, C, D, E and F was received by the petitioners “in payment or part payment of their claim in suit.” It is contended however by the respondents that by reason of the subsequent transactions with reference to these notes, the amount of them should he credited to the respondents on the bill of the petitioners.

No question arises as to note C, because that was paid by Wildes and it has been credited on the account. As to notes A and B, the auditor reports that upon receiving them “ the petitioners negotiated and indorsed and delivered them for value to one Basley, who became the owner and holder thereof, and while said Basley was the holder and owner they became due, and the said Wildes gave the said Basley renewals thereof from time to time, which renewals the petitioners indorsed, and the said Wildes made payments to the said Basley on account of said renewals until the amount due on both notes together was reduced to one hundred dollars ($100), for which amount said Wildes gave his note to the said Basley, which last note the petitioners indorsed, and at the time the petition in this lien case was filed, the said Basley was the owner and holder thereof, and said Basley proved said note against the estate of said Wildes in said bankruptcy proceedings.” This last note was designated by the auditor as “ L.” Notes C and D were negotiated for value to one Chipman, and after various renewals and divisions similar to that above described as to notes A and B, finally were transformed into notes M and N, which at the time of the bringing of this petition were in the hands of Chipman as owner. The same general course was taken as to note F, upon which a partial payment was made, the balance finally being represented by note F, which at the time of the filing of this petition was in the hands of Chipman as owner. It does not appear that Basley has received any dividend from the estate of Wildes.

During the renewals and changes above set forth, there was no time when the petitioners were not liable as indorsers upon the outstanding paper, and since the beginning of this suit the notes L, F, M and N, into which (with the exception of note C which was paid by Wildes and the proceeds duly credited on the account), the original notes had become merged, have been paid by the petitioners, who at the hearing before the auditor and before the court, produced them in evidence and offered the same to be cancelled and returned to Wildes.

The respondents rely upon the doctrine of Morton v. Austin, 12 Cush. 389, 392, namely, that if a lien creditor accepts notes on a lien account and negotiates them he must take them up before he can effectively institute proceedings to enforce his lien. See also Davis v. Parsons, 157 Mass. 584, 588, and cases cited. It is to be noted, however, in the case at bar that the question whether the lien can be maintained is not now open to the respondents under the agreement which was filed when the default was taken off. It is to be assumed that the lien was properly filed, and we are of opinion that under that agreement the real question before the Superior Court at this second trial was “ whether by reason of [these] subsequent transactions, including the payment of note C and the part payment of some others and the renewals, the petitioners had so far received the benefit as that some credit therefor should be given upon the account.” See the report of this same case, 182 Mass. 482, 487. We are of opinion that the rule for which the respondents contend is not to be extended to a case where the issue is like this. Although the petitioners did not take up these notes until after the filing of their petitions, yet they subsequently took them up and produced them before the auditor and the court to be can-celled. Under the circumstances this was enough. They had received no benefit such as to require them to give credit for the amount represented by these notes.

We see no error in the manner in which the court dealt with the question of credits.

Exceptions overruled.